Two Greek banks apply for emergency funding

ATHENS - Reuters

Two major Greek lenders applied to tap the national central bank’s emergency funding a year after ending their reliance on it, a precautionary move stemming from deposit outflows before an election this month, bankers said on Jan. 16.

Greek banks have seen their liquidity tighten as Greeks withdraw cash ahead of a snap election on Jan. 25 and foreign buyers shun recent government T-bill issues, according to a Greek banker, adding pressure on local banks.

Executives at both Eurobank and Alpha said the move was precautionary and partly related to their exposure to Swiss franc mortgage portfolios. Both were yet to make use of emergency liquidity assistance (ELA) funds.

“We are not making use of ELA funding currently and do not foresee that we will need to in the immediate future as we have sufficient collateral to tap funds from the European Central Bank,” a Eurobank executive told Reuters, declining to be named.

“Swiss franc loan exposure is part of the reasons but not the main one,” the executive said.

ELA is effectively emergency loans offered by eurozone national central banks to strapped commercial banks. Greek banks relied on it heavily at the peak of the country’s debt crisis in 2012 but had repaid it by early last year.

Eurobank shares tumbled 8 percent and Alpha Bank fell 7 percent on Friday, pushing the Athens bourse’s banking index down 7 percent.

Greek banks have been putting up collateral to tap European Central Bank funds for their liquidity needs, with their total borrowing rising 2.3 percent to 44.9 billion euros ($52.5 billion) in November. It is expected to top 50 billion euros in December.